Table 8.2

Table 8.2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.
-Refer to Table 8.2.Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed.Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches?

Question

Table 8.2
  
Table 8.2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.
-Refer to Table 8.2.Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed.Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches?

Quizplus · Accepted Answer

Since at both income levels Keira is consuming positive amounts of both soup and sandwiches, we know that they are both normal goods. This is because as income increases, the quantity demanded of both goods increases as well (holding prices constant). Therefore, the correct answer is C, both soup and sandwiches are normal goods.

Table 8.2 Table 8.2 Above Shows Keira's Utility from Soup and Sandwiches